The General Tendency Toward Increasing Variation in Demand and Inventory

question 142

Multiple Choice

The general tendency toward increasing variation in demand and inventory levels as we move further away from the end customer in the supply chain is referred to as

• A) internally generated shortages.
• B) bull-whip effect.
• C) capacity cushions.
• D) continuous replenishment.

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Definitions:

Deferred Gross Profit-Year 1

This refers to the portion of gross profit on sales made in the first year that is not recognized immediately but is deferred to future periods under certain accounting methods.

Realized Gross Profit

The gross income that a company has earned and recognized from its sales or services, after accounting for the cost of goods sold, but before deducting operating expenses.

Installment Sales Revenue

Revenue recognized from sales that are paid in installments over a period, rather than in a single transaction.

Installment Sales Method

An accounting technique used to recognize revenue from sales made on credit, where income is recognized proportionally as payments are received.